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Microsoft Research has already impressed me once today with a transparent OLED display acting as an interactive 3D desktop. But even though this next demo is simpler in terms of the tech, it has the potential to create a much bigger impact on how we communicate and share online.

The setup you see in the video above is called Illumishare. It allows both physical and digital objects to be shared and interacted with by users who are remote from each other. The easiest way to think about it is like video chat, but where you are sharing objects and interactions, not just viewing each other on a screen.

The key to Illumishare is a peripheral that combines both a projector and a camera sitting over a surface you wish to share. The device, which looks like a desk lamp in the video, projects an area all users can see. If you place an object within that shared area, everyone sees the object. The same is true if you draw, put your hands over it–anything within the bounds of the lighted surface gets seen by all.

Microsoft believes, as do I after watching the demo video, that Illumishare adds something new to communication online. Where as talking or video conferencing allows you to communicate, with shared interaction you can better collaborate, play games, teach, or make presentations without having to rely on other software to draw or show slides.

Illumishare is very simple in terms of tech. The combination of projector and camera should be very cheap to combine into a peripheral anyone can use, and I doubt it will take long to see pricing that’s comparable with a typical webcam.

The key problem Microsoft Research has to overcome to get this system working was video echo — stopping what you do on the shared surface echoing back to you endlessly. But with that solved, I’m hoping it doesn’t take too long for this to come to market.